INTEREST rates could further increase as the share of the government’s budget deficit to the overall economy rose to 4.9 percent in the first half of 2024, Leonardo A. Lanzona, Economics professor at the Ateneo De Manila University (ADMU), told the BusinessMirror.
INTEREST rates could further increase as the share of the government’s budget deficit to the overall economy rose to 4.9 percent in the first half of 2024, Leonardo A. Lanzona, Economics professor at the Ateneo De Manila University , told the BusinessMirror.
The national government’s fiscal deficit stood at 4.9 percent of gross domestic product from January to June 2024, higher than the 4.8 percent ratio posted in the same period in 2023. However, according to Lanzona, the growth was achieved at the expense of the poor because the excess reserves of the state-run Philippine Health Insurance Corp. were remitted to the Treasury as new sources of government funds.Lanzona added that the increase in both the GDP and deficit-to-GDP ratio is “enough evidence that something is amiss.”
He noted, though, that “there was still some pick up in government expenditure as bloated by higher prices/inflation since 2022 and also higher debt servicing costs on higher US global and local interest rates, as well as the weaker peso that increased debt servicing costs of foreign debts.” A P613.9-billion budget deficit was recorded in the first half of 2024, as expenditures reached P2.763 trillion outpacing revenue collections amounting to P2.149 trillion.
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